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Entry value is the reported price of an imported product based on information provided by the seller. It may also be referred to as the declared value. The seller lists this price on shipping documents when selling a product to an international buyer. Customs officials rely on this reported value data as they calculate customs and duties on imported goods. Shipping companies may also refer to this value when determining the cost of freight or insurance for the product.
Each product may have two different declared value figures, both of which are based on reports by the seller. The first is the value for carriage. Carriage entry value is typically the same as the seller's cost for producing the item. The shipping company often refers to this value when determining freight costs, though not all shipping firms price freight based on entry value. Insurance firms also look at the carriage entry value when setting insurance limits for the product, or when calculating payment on a claim.
The entry value for customs is often much higher than the entry value for carriage. Customs entry value represents the sell price of the product, or the price that the seller is charging the buyer to purchase the goods. Customs officials focus on the customs entry value when calculating customs duties or taxes due on imports. They are much less likely to pay attention to the carriage entry value, just as shipping and insurance firms pay little mind to the customs entry value.
Given that entry values are reported by the seller, it is common for these values to be inaccurate. For example, the seller may want to underreport this figure to the shipping company in an effort to save on freight. Sellers may also work out a deal with buyers to underreport customs value in an attempt to reduce customs duties and taxes.
In an effort to reduce fraud and misrepresentation of import values, some countries have laws in place requiring support documentation for these figures. In the United States, all imported goods must be accompanied by a commercial invoice or way bill, which reveals the true selling price of the good. Insurance and freight companies may also require support documents related to the seller's costs for producing and shipping the items.
Some countries allow individuals to import or export items as gifts as long as the declared value is below a certain amount. When items are shipped as gifts, customs duties are generally lower or non-existent. To reduce the risk of fraud, customs laws may require that gifts can only be shipped from person to person, and not from one company to another. Agents may also inspect the goods to ensue the true value falls within the requirements set by the law.
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